CBI has filed an FIR against ABG Shipyard and its directors

The Central Bureau of Investigation today filed a case against ABG Shipyard and its directors Rishi Agarwal, Santhanam Muthuswamy, and Ashwini Kumar for allegedly defrauding 28 banks of Rs 22,842 crore in its biggest bank fraud case to date.

The ABG Group’s flagship company, ABG Shipyard Ltd, specialises in shipbuilding and ship repair. The shipyards are located in Dahej and Surat in Gujarat.

The company owes the State Bank of India Rs 2,925 crore, ICICI Bank Rs 7,089 crore, IDBI Bank Rs 3,634 crore, Bank of Baroda Rs 1,614 crore, PNB Rs 1,244 crore, and IOB Rs 1,228 crore, according to a complaint filed by the State Bank of India. According to the CBI, funds were used for reasons other than those for which banks had issued them.

On  November 8, 2019, the bank filed a complaint, after which the CBI requested explanations on March 12, 2020.

In August of that year, the bank filed a new case. The CBI acted on the complaint by filing a FIR on February 7, 2022, after “analyzing” it for almost a year.

According to the central bureau of investigation, the fraud was committed through fund diversion, misappropriation, and criminal breach of trust with the objective of “gaining unlawfully at the cost of the bank’s funds.”

The fraud occurred between April 2012 and July 2017, according to the forensic audit report.

“Global crisis has impacted the shipping industry due to fall in commodity demand & prices and subsequent fall in cargo demand. The cancellation of contracts for a few ships/vessels resulted in piling up of inventory. This has resulted in a paucity of working capital and caused a significant increase in the operating cycle, thereby aggravating the liquidity problem & financial problem. There was no demand for commercial vessels as the industry was going through a downturn even in 2015. Further, there were no fresh defence orders released in 2015. The company was finding it very difficult to achieve milestones as envisaged in CDR. Thus, the company was unable to service the interest and instalments on the due date,” the FIR filed by CBI said.

Rishi Agarwal, a prominent figure in India’s shipbuilding sector, is the group’s leader. ABG Shipyard Limited (ABGSL) operates shipyards in Surat and Dahej that can build boats up to 18,000 dead weight tones (DWT).

In the last 16 years, ABGSL has built over 165 vessels (46 for export) for leading companies in India and abroad, including specialized vessels including such newsprint carriers, self-discharging and loading bulk cement carriers, floating cranes, interceptor boats, dynamic positioning diving support vessels, pusher tugs, and flotilla.

ABGSL also had reportedly bagged contracts from Indian Navy to built ships in 2011, however, the contract was later terminated as the firm was financially struggling.